New US auto fuel efficiency and emissions norms
It must be said, there has not been a dull moment since new US President Barrack Obama took office in January this year. Perhaps in the first flush of enthusiasm of a new administration, new policy pronouncements have been made on a weekly if not daily basis. The economy and the banks, bailout for the automobile industry, the US wars in Iraq and Afghanistan-Pakistan, lifting the ban on stem cells research, all have been touched upon in a breathless spate of new policies, many of them stemming from promises made or positions taken during the Obama election campaign.
The latest of these announcements made on 19 May, 2009, is for new nationwide fuel-efficiency and carbon emissions standards for automobiles in the US. This new policy set by President Obama straddles three separate but inter-linked sectors on which candidate Obama had promised a new approach. First, to reduce US dependence on oil imports bulk of which went into US automobiles. Second, to revamp the near-moribund US automobile industry especially through new fuel-efficient technologies thereby enabling the US to re-emerge as a global leader in the sector. And third, to combat carbon dioxide (CO2) emissions in the US, notably from US road transport, as part of a new US commitment to play a major role in combating climate change.
The new fuel efficiency and emissions standards announced by President Obama this week has been widely hailed as a huge step towards meeting all these goals. As with many other initiatives of the new President, who was often lampooned for his messianic tone and apparent imperviousness to criticism during the campaign, this new policy too has been wildly praised as transformational.
Again as with most new Obama policies, there is certainly some justification for this acclaim. The new fuel efficiency standards will be the first ever measure in the US to regulate greenhouse gas emissions. It is also the first nationwide regulation of auto emissions hitherto only within purview of individual states under a Bush regime framework that prohibited national legislation, a move that was partially affirmed by a conservative-packed Supreme Court but coming under increasing challenge even by Republican-led states such as California. Even the auto industry, which till now had used its immense clout to resist any such regulation, has welcomed it, although one wonders if they would have done so if they were not dependent on the Administration’s bailout plan.
Yet the standards themselves, albeit a considerable advance over existing performance of US automobiles, are not particularly pathbreaking either in terms of the technologies they will call for, and therefore as regards upgrading the US auto industry, or in terms of their impact on climate change. They can only be seen as the first hesitant steps towards meeting the lofty goals set by then Candidate and now President Obama.
New US fuel-efficiency standards The new policy is to begin to take effect in 2012 and the new standards are to be achieved by 2016 with annual targets for the years in between. It requires that new cars and trucks sold in the US must give an average mileage of 35.5 miles per gallon or mpg (14.9 km/litre), with passenger cars having to achieve 39 mpg (16.4 km/l) and light trucks 30 mpg (12.6 km/l). The current average for all vehicle categories is 25.5 mpg (10.7 km/l) — 27.5 mpg (11.6 km/l) for cars and 23.1 mpg (9.7 km/l) for trucks. In other words the new norms call for an improvement in fuel efficiency of about 40 percent.
Obama administration officials project that this would save 1.8 billion barrels of oil and reduce greenhouse gas emissions by 900 million tonnes. One official briefing White House correspondents was quoted as saying, “That is equivalent to taking 177 million cars off the road or shutting down 194 coal plants.” Sounds tremendous, but it really is not if considered against the current low fuel-efficiency of US autos or against standards in other advanced countries.
The US is the natural home of gas (fuel) guzzling automobiles, especially cars and other passenger vehicles. The long-lasting US love affair with the automobile is well-known and received an enormous boost during the post-War New Deal during which thousands of miles of highways were built and the automobile came into its own as the main means even of long-distance surface transport in the US. Americans’ preference for large over-powered cars, huge sports utility vehicles (SUVs) and even pick-up trucks is notorious too. In the past decade SUVs have become extremely popular among US families, including with “soccer moms” and housewives, who use it for transporting their children, doing the weekly shopping at the supermarket or making cross-country weekend trips.
But the protected US domestic automobile market, and low fuel prices, combined so that US auto makers found little incentive to improve technologies or fuel-efficiency leading to the present crisis in the US auto industry.
Higher international standards The fact that the new US fuel-efficiency norms call for only around 15 km/l by 2016, a mileage already familiar even to contemporary Indian car owners, speaks volumes about the gas guzzling capacity of US cars. Comparison with standards in other advanced countries brings this out even more starkly.
China already has a fuel-efficiency requirement of 35.8 mpg compared with the new US standard of 35.5 mpg by 2016!
In Japan and Australia, the current standard is already 35 mpg, slated to rise to 42.6 mpg by 2012 in the former. In the EU, it is still higher at 43.3 mpg currently and slated to go up to 47 mpg by 2012! The only US-made cars with roughly equivalent fuel efficiency are hybrids that run on a combination of petrol and electricity.
In terms of tailpipe emissions, that is the emission standards measured at the exhaust, the new US standards only infer that emissions will be lower because less fuel is consumed, and has left it to the Environment Protection Agency to harmonize the new fuel efficiency standards with emission standards.
In the EU, Japan and Australia, vehicular efficiency standards combine both fuel consumption and emissions. In the UK’s strict norms, tailpipe emissions are used as an index of fuel economy. Australia uses star-ratings that combine the two and also uses the more transparent “inverse ration” of litres/100 km as a measure of fuel economy.
The EU is a study in contrast to the US approach. Under severe pressure due to the on-going recession, the political leadership of EU countries have been trying to slow down the pace of change in the automobile industry which employs hundreds of thousands of people and constitutes a sizeable chunk of GDP. Despite this, just recently, the European Parliament’s Environment Committee has rejected moves to lower and postpone fuel efficiency standards for new cars in Europe. A proposal to put off the new norm of 130 grammes of CO2/km to 2015 rather than 2012 was rejected and a longer-term target of 95 g/km was set to be achieved by 2020, for which new technologies would be required! Penalties for car makers who fail to comply with the new targets were also retained at €95 per gram of CO2 exceeded rather than being reduced to €50 as proposed by the European Parliaments Transport Committee. By this, the EU parliament has sent out a clear signal to the auto industry to step up its efforts to develop the technologies necessary for the next generation of fuel efficient cars. Clearly US automakers will then be far behind. President Obama’s new fuel efficiency standards may force US auto makers to upgrade their models but it will clearly not make them world leaders as per Obama’s vision.
Technology and Costs Nevertheless, the US auto industry which is now perforce being modernized, will have to learn and introduce several new technologies with implications for different sectors of industry.
Changes are likely to start with the smaller cars and light trucks and changes in the engines and fuel systems. Direct fuel injection and higher compression of air-fuel mixture will be needed. Air conditioners, fuel pumps, power-steering and other accessories would need to be driven by electricity rather than directly by the engine as at present. Several companies already making components and systems to match these requirements, such as Honeywell and Continental, are looking forward to a bonanza in supplying turbo-chargers, electric motors and pumps, and more advanced lithium-ion batteries.
The new norms would also mean that more aluminiun, plastics or composite materials, and less steel, would be used in newer automobiles, so companies dealing with the former would gain while steel-makers such as Arcelor-Mittal and United Steel would lose out.
In more direct terms, even though most of the technologies required to meet the new but relatively timid new US fuel-efficiency standards are already available with either US, European or Japanese companies, integrating them with US vehicles and their assembly lines will cost money. This is likely to be quite costly although the “several billions of dollars” being talked about by industry analysts in the US are an exaggeration designed to put pressure on the Administration which ahs already promised $50 billion more towards this end under the bailout plan. In any case, incremental costs would no doubt be passed on to US consumers.
Administration spokespersons have said that the average vehicle will cost about $1300 more after incorporating all the changes required to meet the new norms, although some private analysts say the increase will be much more. The administration maintains that fuel savings will make up the difference in about three years.
But therein lies the rub. Resistance from car owners, which means virtually every US householder and taxpayer, is widely expected along with concomitant pressure from elected representatives and industry lobbyists. US car owners, long used to low fuel prices, are notoriously sensitive to vehicle costs relative to fuel prices. When fuel prices at the pump reached $4 late last year, sales of more expensive car models dropped and that of smaller cars and hybrids rose. With gas prices having come down now, sales of hybrids have dropped again!
If fuel prices in the US are $3.50 in 2012-2016 as predicted in the Obama plan, then US car buyers will certainly move to the even more fuel-efficient Japanese or European cars that will then be available. Unless of course a new round of Obama protectionism is in vogue by then.
Unsustainable path Advanced countries in Europe and the Asia-Pacific have already started taking several of the measures required to tackle fossil fuel consumption by automobiles both for itself and for the sake of combating climate change. The US is however still taking only baby steps. It has not even begun to take cognizance of the fact that merely improving fuel economy in automobiles is insufficient, it is important to realize that low-occupancy personal transportation is rapidly becoming unsustainable, however low its fuel consumption becomes. President Obama has also announced a new long-distance train, the first such in several decades in the US! A total rethink on mass transportation is required in the US if indeed if it is to make the kind of impact President Obama says he wants on tackling climate change.
As for good old India, we have not even begun to think about fuel efficiency standards, not from the point of view of reducing India’s dependence on foreign oil, and not from the viewpoint of climate change mitigation. The auto industry, industry associations and associated organizations have resisted all attempts to introduce fuel efficiency standards apart from the prevalent emission norms. Even the PM’s National Action Plan on Climate Change does not call for mandatory fuel economy standards. And all this even as India plans to emerge as a global hub of automobile exports even if only in the compact car segment. If the US can be described as still taking only baby steps, India has not even started thinking about crawling!